RPM International Inc. (NYSE:RPM) stock fell Thursday after the company reported worse-than-expected second-quarter fiscal 2026 results.
Details
The company reported record sales of $1.91 billion, up 3.5% year over year (Y/Y) and missing the $1.928 billion estimate.
Sales reflected a 0.5% organic decline, 3.4% growth from acquisitions, and a 0.6% boost from foreign currency translation.
Sales hit a record, fueled by acquisitions and engineered solutions for high-performance buildings, though weaker DIY demand moderated growth.
Several construction segments saw slowing momentum later in the quarter, as longer project lead times, partly due to the extended government shutdown, impacted activity.
Adjusted EBIT declined 11.2% Y/Y to $226.6 million in the quarter due to growth investments, lower fixed-cost absorption from reduced volumes, and temporary inefficiencies from plant and warehouse consolidations.
Adjusted diluted EPS was $1.20, a decrease of 13.7% Y/Y, missing the consensus of $1.42.
Operating cash flow was $583.2 million, and capital expenditure was $111.8 million in the first six months of fiscal 2026.
As of November 30, 2025, total debt stood at $2.52 billion, while liquidity came in at $1.10 billion.
The company returned $168.7 million to shareholders via dividends and share repurchases in the first six months of fiscal 2026.
Segment & Geographies Details
By region, Europe led sales growth with an increase of 13.9%, driven by acquisitions and favorable foreign exchange.
North America sales increased 1.9%, driven by acquisitions and high-performance building solutions in the U.S., partially offset by softness in Canada.
Emerging markets were led by Africa / Middle East, with growth driven by high-performance building and infrastructure projects.
Construction Products Group sales rose 2.4% Y/Y to $737.4 million, with adjusted EBIT declining 10.9% Y/Y to $98.6 million in the quarter.
Performance Coatings Group revenue grew 4.4% Y/Y to $533.8 million, and adjusted EBIT fell 0.3% Y/Y to $82.8 million in the quarter.
Consumer Group sales increased 4.1% Y/Y to $638.7 million, while adjusted EBIT dipped 6.2% Y/Y to $90.0 million in the quarter.
SG&A Cost Savings
The company is taking measures to address current market conditions, expected to deliver about $100 million in annual benefits once fully implemented.
Of this, roughly $5 million will be realized in the third quarter, an additional $20 million in the fourth quarter of fiscal 2026, and $75 million in fiscal 2027.
Outlook
For the third quarter, the company anticipates mid-single-digit sales growth with adjusted EBIT rising mid- to high-single digits.
However, for the fourth quarter, RPM sees similar sales growth and adjusted EBIT increasing low- to high-single digits.
The company is also executing SG&A optimization measures projected to deliver around $100 million in annual benefits.
Frank C. Sullivan, RPM chairman and CEO, stated, “Driven by our targeted growth investments, we expect to outgrow underlying markets in the third quarter. However, market demand is expected to remain sluggish as consumer confidence is low and uncertainty in construction markets, including weather-related factors, persists.”
“While visibility for the fourth quarter remains limited, we are controlling what we can and expect to benefit from activity related to previously deferred construction projects and are encouraged that our construction pipeline remains solid.”
Management Commentary
Sullivan added, “The prolonged government shutdown contributed to the trend of longer lead times on construction projects and further pressured already negative consumer sentiment. As a result, sales growth turned negative as the quarter progressed, and earnings declined as we were unable to fully leverage growth investments and overcome temporary margin headwinds from plant and warehouse facility consolidations.”
”Given the slower demand environment, we have moved quickly to put in place SG&A-focused optimization actions that will save approximately $100 million annually once fully implemented, while continuing focused growth investments in our highest potential opportunities.”
RPM Price Action: RPM International shares were down 3.53% at $101.12 at the time of publication on Thursday, according to Benzinga Pro data.
Photo by Piotr Swat via Shutterstock
